Whether building up a cash buffer to meet emergency expenses or saving towards a long term goal like a wedding or a holiday, January is a good time to take a step back, set out your savings goals and put the infrastructure in place to help you achieve your objectives.
It’s been proven that we’re 42% more likely to achieve a goal if we write it down*. With this in mind, the first step of any savings plan should be to set a target, making sure it’s realistic based on current income and spending patterns.
Most people are paid weekly or monthly and it makes sense to try and break down your overall savings goal in line with this cycle. To avoid the temptation of dipping into your growing funds, it can also be helpful to set up a savings account, distinct from your current account, where you can build up your money.
The next step should be to see if you can boost funds by cutting back on any unnecessary everyday spending. For example, if you’ve fallen into the habit of buying yourself a coffee on the way to work each morning, you’re sitting on a potential saving of £10 a week or £520 a year. Buying a sandwich and a drink in town rather than bringing in lunch from home, is also expensive, easily adding £25 a week or a whopping £1,300 a year to your costs and providing ample scope for cutbacks that could be diverted to your savings account.
It’s good advice to review your energy, insurance, phone or TV contracts at least once a year to see if you still need the service or could benefit by switching to a better tariff or an alternative supplier. During 2015, wholesale oil prices fell to their lowest level in years and, while it might take time for this to feed through to household energy bills, it’s worth checking how competitive your current deal is by taking a look on price comparison sites.
Finally, by setting up money saving alerts from the likes of vouchercloud.com, groupon and amazon local, some people now boast that they never pay full price for shopping at their favourite store, eating in their local restaurant or staying away from home. While this might be a bit of an exaggeration, it’s certainly worth taking a look to see if they can help make your money go further in 2016!
*Dr Gail Matthews, Dominican University of California – Strategies for Achieving Goals